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Real estate portals can be bad for you

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With the Internet having become a primary source of research information for buyers shopping for property we have seen a proliferation of websites trying to act as portals (or gateways) to the world of real estate. While the various major real estate portals such as Realtor.com, Zillow, Trulia, Yahoo Homes, Google and others do provide a wealth of information, it's important to cross check and verify whatever tidbits you uncover and not just accept everything you read as being factual and accurate.

Buyers are constantly looking for information on properties that may be of interest to them. So, there is a tendency for many people to spend a lot of time doing research on the Internet and gathering information before contacting a particular agent. It can be helpful to do some advance research and get a general understanding of the markets that you are interested in. But many buyers are taking as gospel information they find on the various real estate portals when some of the information provided is outdated or just flat out incorrect.

Realtor.com is the one real estate portal that generally gets high marks for accuracy. The information found on this website is pulled directly from listings found on the various MLS systems around the country. Agents have the ability to add additional pictures and information, but for the most part what consumers will find is the same information that a local real estate agent would send to them directly from their specific MLS.
However, the other major real estate portals aggregate information from a variety of sources and do not spend sufficient time doing fact checking or verification. This tends to result in a plethora of outdated and inaccurate information residing on these various websites. Properties could have been withdrawn from sale months or even years ago or they might have changed hands, but they can still appear as active listings on the different real estate portals. Yet real estate portals tend to remain very popular among the general public with nearly half of all Internet-based searches being performed through these types of websites.

Real estate portals came into being several years ago during the big real estate boom of the previous decade. While the real estate industry and particularly the National Association of Realtors was trying to figure out the best way to deliver quality content to consumers, a number of entrepreneurs decided to create real estate portals of various flavors. You have portals designed for agents such as Active Rain which promotes the concept of blogging to attract consumers. Then there are the portals that are essentially aggregators of information such as Zillow, Trulia, Yahoo Homes, Google and others.

The aggregators do not really provide any value added services or information beyond what you would get from a knowledgeable agent. They are simply profit centers that have been designed to insert themselves between the real estate agent and the consumer in an effort to earn a share of the real estate economic pie. While I can applaud the creativeness and entrepreneurial spirit of the folks who came up with the concept of the real estate portal, the fact of the matter is that these sites are created primarily for the economic benefit of their founders and investors. Virtually every piece of information you can find on a real estate portal can be provided to you by a good real estate agent doing the research that you request in any particular market. Many agents have felt compelled to purchase sponsorships or buy advertising on the different real estate portals simply out of the need to expand their Internet presence and compete with their fellow agents.

The reality is that real estate portals aggregate information from tax records, MLS systems and other public sources. They then use their own proprietary algorithms to try to calculate property values all over the country. However, according to a phone conversation that I had with one of the top marketing executives at Zillow, "Custom homes are something you can't put an algorithm to.” Since virtually all of the properties in Incline Village and Crystal Bay along with many other communities around the country consist of custom homes, the estimated property values provided on real estate portals are meaningless at best and harmfully misleading at worst.

There is no way that an algorithm can differentiate between your remodeled house with a lake view that is next to forest service land and the neighbor down the street whose property is a tear down without a view. If both houses were built around the same time and have approximately the same square footage the real estate portal algorithm will give both places very similar market values.

Buyers and sellers would do well to avoid the various real estate portals and instead search for a knowledgeable real estate agent who is intimately familiar with their local market. Better yet, get a referral to an agent from someone who you know and trust. While it may be entertaining to search all over the Internet for real estate information, your best bet is to find a good local agent who can provide you with all of the detailed data you are seeking. Be wary of the information that you find when using the various real estate portals because it's unlikely that these aggregators are spending the time and energy necessary to fact check every property and evaluate the pricing data that is being disseminated to the general public.

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